How do encryption exchanges conduct payment services?

Cryptocurrency exchanges primarily provide services for the buying and selling of cryptocurrencies, including asset trading, liquidity provision, custody services, derivatives trading, and currency conversion. As important players in the encryption ecosystem, exchanges have built a strong infrastructure based on encrypted assets, achieving a closed loop for the value exchange of encrypted assets.

Encryption payment refers to the use of cryptocurrency as a means of payment for purchasing goods or services. This involves payment gateways, merchants accepting cryptocurrency, currency liquidity management, currency deposit and withdrawal exchange, asset custody, compliance, and other functions, many of which are already quite mature for exchanges.

The exchange and encryption payment form a symbiotic relationship: the exchange is the "entry point" for encryption payment, providing asset acquisition and liquidity support; encryption payment is the "exit point" for the exchange, expanding the practical application scenarios of cryptocurrency. Encryption payment can address issues of user stickiness, retention, and conversion for exchange users, while also expanding the exchange's B-end capabilities.

Feng, the head of payment services at Gate exchange, stated that their team developed Gate Pay from 0 to 1, which is a cryptocurrency payment product aimed at the B-end and has become one of the industry-leading products.

Feng's background is not in the traditional payment industry, but rather in financial consulting and tech entertainment. He believes that joining the Web3 industry is a natural choice and is optimistic about the development potential of this emerging market. The reasons for choosing the payment track include: the market is in its early stages and has sufficient room for development; payment is the most likely scenario to achieve large-scale application of Web3; the payment industry has strong extensibility and can reach various fields.

Regarding the formation of the payment team, Feng stated that the focus is primarily on two aspects: product and business.

• Product Side: Through researching outstanding products in the industry, combined with Gate's on-chain and exchange capabilities, as well as the actual needs of merchants, efficiently develop and iterate Gate Pay.

• Business side: Because payment is a B2B business, team members need to have strong product understanding and excellent sales skills.

The Gate Pay team is relatively young, and its members are passionate about Web3 and encryption payments. Feng believes that the size of the team is not the key; what matters is the choice of talent. Although Gate Pay has a smaller team, it is composed of outstanding talents in the industry.

In the development of payment in the exchange, it can be divided into two stages:

1. exchange payment 1.0:

   • Essentially a B2C business, mainly serving the existing users of the exchange.
   • Provide an internal payment closed loop for the exchange, such as mall, gift cards, etc.
   • The goal is to meet user consumption needs and improve user retention and activity.

2. Exchange Payment 2.0:

   • The essence is a B2B business, providing services to merchants.
   • Integrate exchange infrastructure to form B-end capabilities externally.
   • Provide enterprise-level payment solutions, including multi-chain and multi-currency support, high concurrency processing, compliance, etc.
   • The purpose is to serve external users of the exchange and expand business scenarios.

Gate Pay is a 2.0 stage product that provides enterprise-level encryption payment solutions for B-end users. Its advantages include:

• Enterprise-level acquiring/distributing capability
• Multi-chain and multi-currency compatibility
• Liquidity management capability
• Multiple jurisdiction licenses and strict compliance capabilities
• Asset Security Protection

Gate Pay adopts an open approach, allowing any merchant and institution to access its product capabilities through API or white-label solutions. This reflects the vision of "the brand is defined by you, and the technology is empowered by me."

Regarding industry competition, Feng believes that the market is still in the early stages, and the relationship is more about cooperation and mutual benefit. Gate Pay is willing to be a builder of infrastructure and a solution provider, actively collaborating with traditional payment companies, merchants, stablecoin issuers, and others to promote the practical application of encryption payments.

Looking ahead, the development trends of exchange payments include:

1. On-chain: With the development of major public chains, payment services are also migrating on-chain. Gate Pay is consolidating its existing advantages while also laying out on-chain business.

2. PayFi: Combining payment with decentralized financial services, such as on-chain credit systems, lending, insurance, etc. This requires addressing challenges such as privacy and compliance.

3. Integration with AI: AI Agent may integrate with Web3 payments to achieve smarter payment and investment services.

Feng believes that the core transformation brought by blockchain is the decentralization of equality. Taking games as an example, blockchain may change the profit distribution model for game content creators and players. Although blockchain games are not yet mature, it is possible that a fairer profit distribution mechanism could be realized in the future.

Finally, Feng stated that the vision of Web3 payment is to benefit the public. By connecting "everyone, every point", Web3 payment is expected to provide financial services to more people and achieve true inclusive finance.